Ohio, Kentucky, Tennessee sue SEC to stop new climate rule

Ohio, Kentucky and Tennessee sued the U.S. Security and Exchange Commission to stop a rule that requires publicly traded companies to report climate-related information.

The suit, filed by Ohio Attorney General Dave Yost on behalf of the Ohio Bureau of Workers’ Compensation, asks the U.S. Court of Appeals for the 6th Circuit in Cincinnati to stop the SEC from “overstepping its authority by meddling in environmental policy,” according to a news release.

Kentucky and Tennessee both joined Yost’s suit. Other states have filed separate suits challenging the same rule in different courts of appeal.

As previously reported by The Center Square, Louisiana, Mississippi and Texas asked for an injunction from the 5th U.S. Circuit Court of Appeals in New Orleans.

“This isn’t a debate about protecting the environment – it’s a question of federal overreach,” Yost said. “The regulator of the stock market has no business setting environmental policy for the country.”

The SEC voted March 6 to adopt a climate-disclosure rule to require public companies to disclose on their registration statements and annual reports anything about climate-related risks caused by their business.

Yost believes the rule is an attempt by the SEC to give itself oversight over environmental issues that have nothing to do with financial markets.

He also said the plan to impose new compliance burdens would hurt financial markets, industries and investments, including those belonging to people with Ohio pensions.

SEC Chairman Gary Gensler said in a statement that these requirements are no different than SEC disclosure requirements for environmental compliance, executive compensation and other mandates drafted under the materiality standard crafted in a series of U.S. Supreme Court decisions from the 1970s and 1980s.

"Our federal securities laws lay out a basic bargain," Gensler said in a release. "Investors get to decide which risks they want to take so long as companies raising money from the public make what President Franklin Roosevelt called 'complete and truthful disclosure.' Over the last 90 years, the SEC has updated, from time to time, the disclosure requirements underlying that basic bargain and, when necessary, provided guidance with respect to those disclosure requirements."

Gensler also said in his statement that most companies are already providing this information, with 90% of the Russell 1000 Index (the top 1,000 stocks traded in the U.S.) already providing information related to climate change and 60% of those on the index are providing information on greenhouse gas emissions such as carbon dioxide.